Proposed amendments
to auditing standards issued today by the AICPA Auditing Standards
Board (ASB) include changes that would clear the way for audits of
financial statements prepared in accordance with the special-purpose
financial reporting framework for small and medium-size entities
(FRF-SME) the AICPA is developing.

The proposal, Omnibus Statement on Auditing Standards—2012,
seeks to amend SAS No. 122 section 800, Special
Considerations—Audits of Financial Statements Prepared in Accordance
With Special Purpose Frameworks, by defining a new
special-purpose financial reporting framework for the purpose of audits.

The proposal would create a new special-purpose framework in the
standards that would accommodate the special-purpose FRF-SME that is
expected to be ready for exposure in October. The new special-purpose
framework would be defined as a definite set of logical, reasonable
criteria that is applied to all material items appearing in financial statements.

This definition is similar to one that previously had been deleted
from AICPA auditing standards because of lack of use. The previous
definition, though, gave price-level accounting as a practical
example. Since price-level accounting was practiced rarely—if ever—the
definition had been eliminated.

The ED also proposes to amend AU-C section 600, Special
Considerations—Audits of Group Financial Statements (Including the
Work of Component Auditors). The proposal would permit making
reference to the audit of a component auditor in the auditor’s report
on the group financial statements when the component’s financial
statements are prepared using a different financial reporting
framework than that used for the group financial statements if certain
criteria are met. The ASB is specifically seeking comments on this issue.

The ASB had learned that in practice, sometimes the component
auditor is unfamiliar with U.S. GAAP, and the conversion adjustments
are made up by group management so that the auditor can audit the
conversion adjustments without having to get involved in the work of
the component auditor. In those rare circumstances, the ASB believes
it is appropriate to make reference to the audit of a component auditor.

TAX NEWS

President Barack Obama signed legislation that retroactively extended more than 50 expired tax provisions for 2014, allowing taxpayers to take advantage of a host of tax incentives during this filing season.

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